Johnson Service Group (LSE:JSG), the UK and Ireland textile rental and workwear services provider, said it remains on track to hit a full-year adjusted operating margin of at least 14%, even as its HORECA (hotels, restaurants and catering) division faces a "challenging" market backdrop.
Revenue for the six months to 30 June rose 0.2% to £258.0 million against £257.5 million a year earlier, while adjusted operating profit increased 3.8% to £29.8 million, lifting the adjusted operating margin by 50 basis points to 11.6%.
Workwear revenue grew 2.6% to £74.0 million with adjusted operating profit up 5.8% to £11.0 million, a 14.9% margin, while HORECA revenue slipped 0.8% to £184.0 million even as its adjusted operating profit rose 4.0% to £23.4 million on improved cost control.
"Although the seasonal uplift in HORECA was more modest than originally anticipated, we expect to deliver another year of progress," said chief executive Peter Egan.
Net debt excluding lease liabilities climbed to £135.9 million from £112.4 million at December, pushing leverage to 1.11 times against 0.95 times, reflecting dividend payments and an ongoing £55.0 million share buyback, of which £28.2 million had completed by 31 August.
Adjusted diluted earnings per share rose 8.7% to 5.0p.
Management said softer HORECA trading is expected to persist through the remainder of the year, though productivity gains and cost discipline should help offset the impact.
News Intelligence what this means for the company
Johnson Service Group held flat revenue at £258.0m in H1 2026 but grew adjusted operating profit 3.8% to £29.8m, lifting the margin to 11.6%—50 basis points ahead of last year. The group reiterated its full-year adjusted operating margin target of at least 14%, signalling confidence in H2 delivery despite acknowledging that HORECA (71% of revenue) faces a 'challenging' backdrop with a 'more modest' seasonal uplift than expected. Management expects softer HORECA trading to persist but believes productivity gains and cost discipline will offset the drag.
The margin expansion despite revenue stagnation and HORECA headwinds shows operational leverage is working—but the 14% full-year target requires a 230 basis point jump in H2 from the current 11.6%, a steep climb if HORECA softness persists. Leverage has risen to 1.11x from 0.95x as the company funds a £55m buyback and dividends, narrowing financial flexibility if trading deteriorates further.
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